Cession as Security Agreement
What is a Cession as Security Agreement
In a cession in security, the cedent transfers its right of action to a debt owed to it, known as the principal debt, to the cessionary as security for the debt owed by the cedent to the cessionary, known as the secured debt. A right of action is the legal standing to collect the principal debt. The ownership in the right, however, remains vested in the cedent despite the cession.
When do I need this?
A Cession as Security is often used in financing transactions when the Lender requires the Borrower to provide security for the repayment of the secured debt. The Cession as Security Agreement can, however, be used in various other situations where a person requires additional comfort that amounts due to him or her will be paid - for example where an AOD is entered into or a supplier extends credit to a customer.
Do I need a legal expert to assist?
A Cession as Security is a technical document that needs to be drafted with care. We recommend that you speak to one of our Contract Specialists to ensure that the intention of the Parties are correctly reflected in the Cession as Security.